Regarding "b: No. But driving the competitor out of business assumes that you're doing the same task more efficiently (with fewer people), which is theoretically better for the economy as a whole, since it means that the same goods/services are produced at less cost, and frees up labor for other things.
Regarding "c": How exactly would we be worse off as a society in this context? Replace "dig holes" with "pick up litter" or some other menial but necessary task, and it looks like a net win to me. You expend the same money, but actually get some small societal return on your investment. Can you actually argue that welfare recipients _ought_ to be idle?
Regarding "d": Aren't higher taxes and greater difficultly in obtaining starting capital "drags on efficiency"?
Regarding "e": Imagine you have a brilliant idea on how to produce, market, and sell widgets. To get started, you need new equipment, a storefront, and some working capital. How do you obtain these things? If someone lent you the capital to get started, and you created a new business as a result, are they not (at least tangentially) engaged in a 'productive' activity?